MIDTOWN AIR FAIR: When it comes to available air rights in the Grand Central Terminal district, Andrew Penson of Argent Ventures is the undisputed king of the landlords, with most of the nearly 1.5 million square feet. Photo: Helayne Seidman, Robert Mecea/Getty Images

Andrew Penson (Getty Images)

MIDTOWN AIR FAIR: When it comes to available air rights in the Grand Central Terminal district, Andrew Penson (inset) of Argent Ventures is the undisputed king of the landlords, with most of the nearly 1.5 million square feet. (Helayne Seidman, Robert Mecea/Getty Images)

Up-zoning the district near Grand Central Terminal is vital to the city’s future, a way to ensure that Manhattan’s most desirable commercial zone can compete in the future with global capitals like London and Shanghai.

But unless you’re a property owner or a land-use lawyer, the topic can put you to sleep faster than anything they sell at Duane Reade.

That’s where Realty Check comes in.

Let’s explain in English what the Department of City Planning (DCP) has in mind — and clear up misconceptions in the press over the past week. Stay with us, because after the baby steps, it gets more interesting:

1. What is it? If approved by the City Council, the plan would allow developers to build larger buildings in certain parts of Midtown — like between 39th and 57th streets and between Second and Fifth avenues.

2. Why is it necessary? Current zoning permits new structures to have a floor-area ratio (FAR) of only 15 — which is smaller than many of the buildings that already exist because the area was down-zoned in 1961, after they were constructed. The city urgently needs modern new office towers, but nobody’s going to put up such small ones that are now allowed in Midtown’s precious heart.

3. Whoa! — 383 Madison Ave., which opened in 2000, doesn’t look like one of those smaller buildings. In fact, the former Bear Stearns headquarters, now part of JPMorgan Chase, was indeed built to up-zoned specifications in the late 1990s-2000.

In techno-speak, it has a 21.6 density rating, or FAR. How was that possible with a limit of 15?

“An arduous process,” says DCP East Midtown project manager Frank Ruchala. It included going through the city’s Uniform Land Use Review Procedure (ULURP), buying air rights and negotiating with the MTA and the city — an exception to 1961 down-zoning permitted under a 1992 Grand Central Subdistrict, which was supposed to liberate properties from the 15 FAR rule but almost never did.

The new zoning is supposed to make things less “arduous.”

4. All right, how much bigger could new buildings be under the new proposal? From slightly larger (18 FAR) to much larger (30 FAR), depending on where in the district they are.

5. But I’ve seen maps showing one big district with no FAR subdivisions. They were maps of the DCP’s “study area.” In fact, the district to be up-zoned is chopped into distinct sub-zones.

And it’s been shrunk from the boundaries shown in the Wall Street Journal last week. Rezoning on Third and Lexington avenues would apply only as far north as 54th Street, not 57th Street, and no longer east to Fifth Avenue but to Madison.

It’s even more complicated: there’s one set of rules for developers who proceed “as of right” — which isn’t as simple as it sounds either — and those who seek a “special permit” to erect even larger buildings than those allowed as of right.

6. OK, how big? Under the “as of right” framework, the up-zoning would be to a 24 FAR in the roughly square area bounded by 42nd and 46th streets and Lexington and Madison avenues; and 18 or 21.6 FAR in corridors running north and south of and parallel to the square.

Contrary to what’s been published, there are no height limits in the area either in existing zoning or in the rezoning.

Greater heights than today’s would be entirely a function of the enlarged FAR, which require more floors to accommodate more square feet, and thus a loftier building. Not that the new zoning would lead to a sprouting of tall “sliver” buildings — it requires “qualifying sites” to have full-block avenue frontage and a minimum 25,000 square-foot footprint.

7. What’s the catch with “as of right”? A developer would not have to go through time-consuming and costly ULURP. But they’d have to pay the city for each additional square foot desired to build in excess of the current 15 FAR or buy air rights (see No. 10 below).

The payment to the city would buy a District Improvement Bonus (DIB) to help pay for transit and other public-oriented upgrades in the area.

8. How much might that cost? “We’re working on that,” says DCP Manhattan director Edith Hsu-Chen. It won’t come cheap. “It isn’t going to be like at Hudson Yards,” Hsu-Chen said. The DIB in the Yards district, similar to what’s proposed near Grand Central, is $120 per square foot. “This will be more,” she said.

9). What about “special permits”? You could build larger than under the as-of-right framework at certain locations — up to 30 FAR in the square described in No. 6 above, and to 24 FAR on Park Avenue north of it to 57th Street.

But those proposals must go through ULURP.

Plus, a design must be approved by the City Planning Commission, which would decide whether it delivers “a superior relationship to other buildings, the skyline and the sidewalk.”

10. To build the maximum size allowed under either option, must I buy all the bonus FAR from the city? In much of the overall rezoned district, yes. But there’s another option in the “Grand Central Subdistrict” which includes much of the land from 39th-49th streets.

There, you’d still have to buy at least the first three additional FAR as a DIB. But you could also buy the rest in the form of development (air) rights from Grand Central area landmarks.

Nearly all the roughly 1.5 million square feet of available air rights are those attached to Grand Central Terminal itself. They are owned by Andrew S. Penson’s Argent Ventures, which — as Lois Weiss first reported way back in 2007 — bought the land under the station and the air above it.

11. So one day the city and Argent could be in competition to sell FAR to the same developer? That’s the way it sounds to us.

12). What does “one day” mean?” The new zoning won’t take effect until 2017, because Planning Commissioner Amanda Burden wants to protect the Hudson Yards District from competition in the short run. Or even the appearance of competition — since many real estate insiders say that a rezoned Midtown East wouldn’t really compete with Hudson Yards, which will have larger footprints and floor plates and lower tenant costs due to subsidies.

While Burden is committed to Midtown’s long-term future, she’s passionate about letting nothing interfere with or dilute interest in Hudson Yards right now.

She told us, “We believe we need this time, five years, for these new [Hudson Yards] buildings to anchor. We want to send a crystal-clear signal that Hudson Yards is an enormous priority for the [Bloomberg] administration.”

Unlucky 13. How does a five-year wait affect Grand Central landlords right now? It won’t, unless you’re one of the handful who have properties which will soon be empty and ripe for redevelopment.